Quick Win by The Algorithm: Under Armour Rebounds and Starts Running Again

Quick Win by the Algorithm

 

Under Armour has released its fourth quarter results, resulting in an important rebound as the company begins to run again.

For years, Under Armour was a high-performing success, continuously achieving excellent results for investors. Recently, growth has stalled, and the company has failed to adapt to the changes in the retail landscape. Ultimately, Under Armour has experienced a lengthy downward trend, and investors have endured a tough time.

In 2017, Under Armour was one of the top losers among apparel stocks. Its share price fell 50% during the year, whilst competitors including Nike (NKE) and Lululemon Athletica (LULU) recorded approximately 20% gains. Furthermore, Skechers (SKX) surged 50% over 2017.

Nevertheless, investors have turned bullish on Under Armour as the company released its 2017 fourth quarter results and reported a top-line beat, driven by a strong international performance. Shareholders saw one of the best days in the past two years as the stock rose more than 17% on February 13, 2018.

CEO Kevin Plank stated, “We are getting incrementally better every single day, and we are feeling that right now.”

Under Armour reported a 4.6% year-on-year increase in revenues which amounted to $1.4 billion. This was extremely important for the company, particularly after it reported a 5% decline in revenues in the third quarter. Indeed, shareholder sentiment has improved, and its stock price increased more than 22% in the two trading days’ post announcement.

The growth was primarily driven by an expansion of international sales. International revenue was up 47%, with sales accelerating in all three major international markets from the previous quarter.

Under Armour’s fourth quarter results were able to stop the slide in the stock and convert its year to date losses into a marginal gain of 1%.

For the entire year, Under Armour reported a GAAP loss of $48 million. This was a likely result of the restructuring expenses.

Whilst Under Armour may have reversed the troubling trend and achieved growth in the forth quarter, its bottom-line results are still heavily impacted by restructuring. Under Armour recorded a net loss of $88 million in the quarter, extremely lower than the $103 million net income over the year. A significant loss was due to costs related to the new federal tax law passed at the end of 2017, coupled with the $36 million in impairment charges related to restructuring.

In 2018, Under Armour has expanded its restructuring plans and will spend $110 million to $130 million in facility, lease and contract terminations. Ultimately, the restructuring efforts should reduce annual expenses by $75 million starting in 2019.

On February 12th, 2018, I Know First issued a bullish three day forecast for Under Armour, Inc. (NYSE:UAA). The forecast illustrated a signal of 7.92 and a predictability of 0.08. In accordance with the forecast, UAA’s stock returned 33.89% over this period, highlighting another quick win by the I Know First algorithm.Current I Know First subscribers received this bullish UAA forecast on February 12th, 2018.

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Under Armour, Inc., (NYSE: UAA) together with its subsidiaries, develops, markets, and distributes branded performance apparel, footwear, and accessories for men, women, and youth primarily in North America, Europe, the Middle East, Africa, the Asia-Pacific, and Latin America. The company offers its apparel in compression, fitted, and loose types to be worn in hot, cold, and in between the extremes. It also provides various footwear products, including running, basketball, cleated, slides and performance training, and outdoor footwear. In addition, the company offers accessories, which include headwear, bags, and gloves; and digital fitness platform licenses and subscriptions, as well as digital advertising. The company sells its products through wholesale channels, including national and regional sporting goods chains, independent and specialty retailers, department store chains, institutional athletic departments, and leagues and teams, as well as independent distributors; and directly to consumers through a network of brand and factory house stores, and Website. Under Armour, Inc. was founded in 1996 and is headquartered in Baltimore, Maryland.

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